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Forex Daily News | Forex Articles | Forex Information
Thursday, 04 November 2010 10:34

GBP/JPY Classical 04/11/2010

Contributed By: DailyFx

GBPJPY_Classical_04112010

GBP/JPY: A closer look at Ichimoku studies suggests that we are still very much in downtrend, with the market most recently breaking to fresh 2010 lows by 126.45. However, as mentioned in previous commentary, daily studies were looking quite stretched, and despite the break to fresh yearly lows, the latest sharp bounce suggests that overall, the market is very well supported in the 126.00’s on a medium-term basis. From here, we would not at all be surprised to see additional upside towards 135.00, but we prefer to remain sidelined given what is still an overwhelmingly bearish trend.

Published in Forex News
Thursday, 04 November 2010 10:34

NZD/USD Classical 04/11/2010

Contributed By: DailyFx

NZDUSD_Classical_04112010

NZD/USD: The market continues to accelerate with the latest rallies extending to fresh yearly and multi-month highs and fast approaching critical psychological barriers by 0.8000. However, we recommend that bulls proceed with caution at current levels with daily studies officially overbought and warning of a near-term pullback. As such, any rallies into 0.8000 should be aggressively over the coming sessions in favor of a short-term bearish reversal at a minimum.

Published in Forex News
Thursday, 04 November 2010 10:35

USD/CHF Classical 04/11/2010

Contributed By: DailyFx

USDCHF_Classical_04112010

USD/CHF: We contend that the market is in the process of carving a material base by 0.9460, and any setbacks should be very well supported ahead of this level in favor of a sustained recovery. The latest setbacks are now being well supported by the 20-Day SMA, and we look for the market to hold above this level on a close basis, ahead of the next upside extension to be confirmed on a break back above 0.9975.

Published in Forex News
Thursday, 04 November 2010 10:35

USD/CAD Classical 04/11/2010

Contributed By: DailyFx

USDCAD_Classical_04112010

USD/CAD: While we retain a medium-term and longer-term bullish outlook, rallies remain well capped for now, with the market once again dropping back towards parity. However, despite the weakness, we recommend buying on dips into the major psychological barrier with the market expected to be very well supported by the figure. Ultimately, only a close back below 0.9970 would give reason for concern, while a break back above 1.0160 will relieve downside pressures.

Published in Forex News
Thursday, 04 November 2010 10:31

USD/JPY Classical 04/11/2010

Contributed By: DailyFx

USDJPY_CLassical_04112010

USD/JPY: While we like the idea of the market establishing a major base by current levels over the medium and longer-term, short-term price action has still not confirmed any signs of a bottom, with the price action over the past few days more characteristic of a bearish consolidation ahead of the next drop towards the record lows. Ultimately, a close back above 82.00 will now be required to relieve downside pressures. However, we will be on the lookout for an opportunity to buy on dips below the 79.75 record lows.

Published in Forex News

Contributed By: DailyFx

The highly anticipated Fed decision on a second round of quantitative easing is now finally behind us, and the markets can now take the time to digest the move. Overall, the decision to implement another round of QE was fairly balanced, with the central bank basically meeting market expectations. The implications are likely to be net USD bearish, with the buck seen in more of a gradual slow grind lower, rather than suffering from any precipitous declines. The key level to watch now comes in by the major falling trend-line resistance in the Euro off of the record highs from 2008, which currently resides in the 1.4500 area. At this point, we think that a test of this level is very realistic over the near-term.

The balance in the Fed statement is to be commended, and although we were looking for a less accommodative statement, there were some key takeaways that leave us encouraged with the outlook going forward. However, first, we will take the time to outline the points which we feel will contribute to more US Dollar depreciation over the near-term. The fact that the Fed committed to $600B in additional QE comes in on the higher end of consensus estimates, with that alone to likely fuel additional selling in the Greenback. Additionally, the repeated use of the word “mandate” along with a reference to “statutory mandate” suggests that the Fed is bound by the law to continue to take some form of action (additional stimulus) if they are not meeting their goals. We also believe that this mandate becomes all the more relevant in light of the latest setbacks for the Obama Presidency following the mid-term elections.

Now on to the encouraging points. There were three key positives in the statement for USD bulls that allow us to retain our medium-term and longer-term USD bullish bias, and will almost certainly have us looking to aggressively sell the Euro by 1.4500. 1. Although the $600B was on the higher side of expectation, the breakdown of $75B per month was certainly not, and in fact was quite low relative to what the markets had been looking for. 2. The indications in the statement that the Fed would be committed to buying additional securities over the medium-term and not the longer-term sends a message that the central bank is still trying to keep policy as balanced as possible and is indeed worried over the impact of any longer-term commitments. 3. Finally, the use of the words “regular review” can not be welcome for USD bears and QE bulls, with the language suggesting that the Fed could rein in QE at any time. Additionally, the use of the “regular review” language also should be additionally unnerving for USD bears and QE bulls, in light of the fact that the one lone FOMC dissenter (Hoenig) will soon be replaced by a trio of hawks in January. This is something that should not be taken lightly and could very well force a rethink of Fed policy with positive USD implications

Moving on, data in Asia has been highlighted by some really impressive Kiwi employment data which has helped to propel the NZ currency into the top performing slot on the day. Meanwhile, Aussie data was mixed, with a narrower trade balance and weaker than expected retail sales.

Looking ahead, Swiss foreign currency reserves are due at 8:00GMT, along with UK Halifax house prices. Swiss CPI is then out at 8:15GMT, followed by German services PMI at 8:55GMT and Eurozone services PMI at 9:00GMT. Eurozone PPI is then out at 10:00GMT, with the rest of the event risk carrying over to the North American open with the Bank of England and ECB rate decisions at 12:00GMT and 12:45GMT respectively. There are no policy changes or major surprises expected from wither central bank. US equity futures point to a slightly lower open, while commodities are well bid led by oil gains.

Published in Forex News

USD Dollar (USD) – The Dollar fell against most major currencies in Forex trading as the Fed said it would buy $600 billion of Treasuries under a policy know as quantitative easing. This statement succeeded to drift the stock markets and higher yielding assets. In addition, Interest Rate remained at 0.25%, ADP Non Farm Employment Change came out better than expected at 43K vs. 21K forecast, and the ISM Non-Manufacturing PMI came out beating expectations at 54.3 vs. 53.5 forecast. The NASDAQ and Dow Jones advanced by 0.27% and 0.24% respectively. Crude oil strengthened by 1.0%, closing at $84.69 a barrel, Gold (XAU) decreased by 1.4%, closing at $1337.60 an ounce. Today, Unemployment Claims are expected at  437K vs. 434K prior, Nonfarm Productivity  is expected to become positive from -1.80% to 0.60%.

Euro (EUR) – The Euro rose to a nine month high versus the Dollar after the Federal Reserve said it will pump more money into the economy by boosting asset purchases to spur inflation and employment. The EUR/USD has a strong resistance at the 1.4050 - 1.4100 levels if it stays above this price, the momentum continues to be bullish. Overall, EUR/USD traded with a low of 1.3992 and with a high of 1.4191. Today, the Interest Rate Decision is expected to remain at 1.00%, and the ECB Press Conference will happen today.

EUR/USD – Last:

Resistance

Support

British Pound (GBP) – The Pound gained versus the Dollar and the Euro after a report showed that U.K. services growth unexpectedly accelerated in October (53.2 vs. 52.4 forecast), bolstering the view that the Bank of England will keep its policy unchanged tomorrow. The resistance of the GBP/USD on the daily chart is 1.6080, and as long as the pair is trading above this level, the momentum is bullish for the pound. Overall, GBP/USD traded with a low of 1.6007 and with a high of 1.6176. Today, the Interest Rate Decision is expected to remain at 0.50%, and Halifax HPI is expected to rise from -3.6% to 0.4%.

GBP/USD - Last:

Resistance

Support

Japanese Yen (JPY) –The Yen weakened from a near 15 year high against the Dollar as signs the worldwide economic recovery is gathering momentum boosted Asian shares, sapping demand for the Japanese currency as a refuge.  The USD/JPY has been trading around 80.00-81.00 area in the last few days. The main support line on the daily chart is located at 80.00, and the momentum is still bearish as long as it‘s trading below the 10 moving average and the 82.00 level. Overall, USD/JPY traded with a low of 80.60 and with a high of 81.58. No economic data is expected today.

USD/JPY-Last:

Resistance

Support

Canadian dollar (CAD) – The Canadian Dollar advanced for a fifth day as stocks rose following the Federal Reserve’s announcement of debt purchases, encouraging demand for assets related to economic growth. The support level of the USD/CAD on the daily chart is located at 1.0000, if the USD/CAD breakdown below this level, a short position is preferred and the momentum continues to be negative for the Dollar. Overall, USD/CAD traded with a low of 1.0045 and with a high of 1.0157. Today, Ivey PMI is expected at 69.70 vs. 70.30 prior.

USD/CAD - Last:

Resistance

Support

 

 

 

Published in Forex Articles
Wednesday, 03 November 2010 12:51

USD/CHF Classical 03/11/2010

Contributed By: DailyFx

USDCHF_Classical_03112010

USD/CHF: With daily studies finally crossing up from oversold and the market managing to close back above the 20-Day SMA for the first time since August, we are encouraged with the prospects for the formation of a major base by the recently established record lows at 0.9460. From here, look for any intraday setbacks to be well supported on dips towards 0.9700, with the market now eying a move towards next key resistance by 1.0000 over the coming sessions. Inability a couple of weeks back to extend declines to yet another record low below 0.9460, set up a strong bullish reversal week to end a sequence of 9 consecutive weekly lower highs. This further strengthens our constructive outlook and over the medium and longer-term we see significant upside risk. The market is now looking to establish back above the 50-Day SMA for the first time since mid-June.

Published in Forex News

Contributed By: DailyFx

FUNDYS

The US elections have failed to stir any volatility, although President Obama can’t be happy with the results which have the Republicans gaining more control and likely to stifle any additional White House initiatives. While the Democrats have retained control in the Senate, Republicans have regained control of the House, and it will be interesting to see how the President responds to this latest disappointment which actualize the increasing public disapproval of the Presidency.

Relative Performance Versus USD Wednesday (As of 10:00GMT)

1. STERLING+0.53%
2. KIWI +0.30%
3. CAD+0.15%
4. EURO+0.07%
5. AUSSIE-0.10%
6. SWISSIE-0.12%
7. YEN-0.21%

Meanwhile, all has been very quiet in Asia and Europe, with most major currencies locked in some tight directionless trade. One of the weaker currencies on the day has been the Australian Dollar, which has taken a minor hit back below parity following a much weaker than expected and disturbing building approvals number. We can’t say that we haven’t been pleased with the latest pullback after establishing a fresh short trade by 1.0005 in Aud/Usd on Tuesday. In our opinion, the RBA has moved too aggressively in raising rates and should be much less worries about inflationary pressures, and more focused on the risks for a cooling off in the economy.

Moving on, Sterling has been the best performer, with some stronger than expected services PMI data helping to generate fresh bids. Although the Franc hasn’t reacted much to its local data, it is worth noting that Swiss retail sales were significantly improved from the previous showing.

Clearly the key even risk for the day comes later in the North American session when the FOMC finally comes out with its decision on QE2. At this point the markets have all but priced in some form of additional stimulus, and the question is more of just how much the Fed will inject. We have argued that the Fed should do as little as possible, while continuing to convey a message that the economy is stabilizing and starting to show signs of growth. Should the Fed pump in less than the market is looking for, then we can expect to see the US Dollar mount a serious short-term recovery. However, should the Fed match or exceed market expectations, then we can expect to see the buck remain under pressure.

With all of the volatility in the markets expected later today, we would recommend keeping a close eye on Usd/Jpy which is so close to testing its record lows by 79.75 from 1995. We retain a highly constructive outlook for the pair once this level is taken out, and will be looking to issue a buy recommendation in Usd/Jpy somewhere at or below 79.75. Given how we expect markets to move later today, Wednesday could be the day where a new record low is set.

Looking ahead, US Challenger job cuts are due at 11:30GMT, followed by ADP employment (20k expected) at 12:15GMT. ISM non-manufacturing (53.5 expected) and factory orders (1.6% expected) are then out at 14:00GMT, with some oil and gas inventory data shortly after at 14:30GMT. At 18:15GMT, the market will finally get the Fed decision, while domestic vehicle sales (8.90M expected) and total vehicle sales (11.80M expected) are due for release late in the day at 21:00GMT. US equity futures are flat, while commodities are mixed with oil slightly higher and gold unchanged.

GRAPHIC REWIND

 

Waiting_for_the_Fed_Dont_Expect_Much_In_the_Way_of_Volatility_Ahead_of_the_Event_Risk

TECHS

EUR/USD: The prospects for a head & shoulders top are fading following the latest break back above 1.4000, and the market is once again contemplating a fresh upside extension beyond 1.4160 and towards some major longer-term falling trend-line resistance by 1.4500 off of the record highs from 2008. For now, we will retain our bearish outlook and look for any rallies to be very well capped ahead of 1.4080, in favor of some renewed weakness. Key short-term support comes in by 1.3735 and a break below will be required to reaffirm outlook and accelerate declines.

USD/JPY: While we like the idea of the market establishing a major base by current levels over the medium and longer-term, short-term price action has still not confirmed any signs of a bottom, with the price action over the past few days more characteristic of a bearish consolidation ahead of the next drop towards the record lows. Ultimately, a close back above 82.00 will now be required to relieve downside pressures. However, we will be on the lookout for an opportunity to buy on dips below the 79.75 record lows.

GBP/USD: The latest close back above 1.6000 is concerning for bears, with the market contemplating a fresh upside extension beyond 1.6100. Still, the market has been very well capped on rallies above 1.6000 in recent weeks, and will look for another topside failure in favor of a some renewed weakness and a continuation of a broader multi-week range trade. However, should the market manage a close above the 1.6100 figure for more than 2 days, it will force a shift in the outlook and expose fresh upside towards 1.6500 further up. For now we remain sidelined and await a clearer signal.

USD/CHF: With daily studies finally crossing up from oversold and the market managing to close back above the 20-Day SMA for the first time since August, we are encouraged with the prospects for the formation of a major base by the recently established record lows at 0.9460. From here, look for any intraday setbacks to be well supported on dips towards 0.9700, with the market now eying a move towards next key resistance by 1.0000 over the coming sessions. Inability a couple of weeks back to extend declines to yet another record low below 0.9460, set up a strong bullish reversal week to end a sequence of 9 consecutive weekly lower highs. This further strengthens our constructive outlook and over the medium and longer-term we see significant upside risk. The market is now looking to establish back above the 50-Day SMA for the first time since mid-June.

FLOWS

A UK clearer was on the offer in Eur/Gbp early with a French bank seen on dips. Model types were on the bid in Eur/Usd with Eastern European names selling from the top. An ACB was on the offer in Cable with real money and spec types on the bid.

 

Published in Forex News
Wednesday, 03 November 2010 12:51

Daily Sound Bites 03/11/2010

Contributed By: DailyFx

Daily_Sound_Bites_03112010

Published in Forex News
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